TFSA
Tax-Free Savings Account

Characteristics of the TFSA and the RRSP

TFSA

RRSP

Accumulate tax-free savings to carry out projects throughout your lifetime.

Accumulate tax-deferred savings for retirement while lowering your taxable income at the time of contribution.

Contribution Deadline

None

You can contribute to a TFSA so long as you have not exceeded the contribution limit.

Before the sixtieth day of the following year

Minimum Age

18 years old

No minimum age but you must be over 18 years old to deposit more than $2,000.

Maximum Age

None

You must convert your RRSP into a Registered Retirement Income Fund (RRIF) no later than December 31 of the year you turn 71.

Income Required

None

Employment, business or excess net rental income is required to accumulate contribution room.

Annual Contribution Limit

$6,000 in 2019

The annual TFSA contribution limit does not depend on income. It is the same for all Canadians.

18% of income earned in the preceding year to a maximum of $26,230 (for 2018). The maximum contribution established by the Canada Revenue Agency, as well as income, determine the annual contribution limit.

Contribution Room

Contribution room has been cumulative since the TFSA was created in 2009 and stands at $63,500 in 2019.

Contribution room is cumulative and corresponds
to deductions not used in previous years, starting
from 1991.

Deductions

Contributions are not deductible from taxable income.

Contributions are deductible from taxable income.

Withdrawals

Not taxable

You can withdraw money from your TFSA at any time without being taxed. In addition, the amount withdrawn is added to your limit for the following year.

Taxable

You must pay tax if you withdraw money from your RRSP. The amount withdrawn is not added to the limit for the following year.

Investment Income

Not taxable

Tax-deferred

Impact of Withdrawals on Government Benefits or Tax Credits

None

Withdrawals are not considered taxable income.

Involves a decrease or a loss.

Withdrawals are considered taxable income.

Over-contribution

Subject to a penalty tax of 1% a month on the excess amount until it is withdrawn from the TFSA.

Subject to a penalty tax of 1% a month on the excess amount until it is withdrawn from the RRSP.

A lifetime over-contribution totalling $2,000 is allowed without penalty.

Contribution to a Spousal Account

There is no such thing as a spousal TFSA.

Even so, the income allocation rules of the Canada Revenue Agency do not apply when you give money to your spouse for a contribution to his or her own TFSA.